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EU fines firms $260 mln for chemicals price fixing

The European Commission issued fines totaling €173 million ($260 million) to 24 companies for belonging to a cartel that fixed prices for heat stabilizers.

The biggest fine was issued to Swiss group Ciba, which was told to pay a total of €68.4 million for coordinating the pricing of two kinds of heat stabilizer -- chemicals which are involved in making PVC and packaging products heat resistant and more rigid.

Dutch group Akzo was fined a total of €40.6 million, France's Elf Aquitaine was ordered to pay €28.6 million and British-US group Elementis €32.5 million. An Austrian firm, Chemson, was fined €3.8 million.

“The companies' elaborate precautions to cover their tracks did not prevent the Commission from revealing the full extent of their determined efforts to rip off their customers,” EU Competition Commissioner Neelie Kroes said in a statement.

“These companies must learn the hard way that breaking the law does not pay and that repeat offenders will face stiffer penalties.”

US corporation Chemtura was found to have participated in the cartel but had its fines cancelled because it brought the price-fixing issue to the Commission's attention.

Arkema, a firm owned by Elf Aquitaine, had its fines increased by 90% as it had taken part in previous such cartels, the Commission said.

BASF, the German company that owns Ciba, said it would appeal the fine, citing a statute of limitations. It said Ciba had sold the firm that engaged in the price-fixing 10 years ago.

Elementis also said it would appeal the fine, while AkzoNobel, owner of Akzo, said it was reviewing the decision and pointed out that it had two months to lodge a court appeal.

The Commission's decision is another sign that competition boss Kroes is determined to show she is a consumer champion and will root out corporate malpractice as she prepares to end her five-year term in office.

Her investigation into the companies' activities began in February 2003 after Chemtura lodged an application for immunity. The price-fixing began in 1987 for tin stabilizers and 1991 for what are known as ESBO stabilizers and continued until 2000.

“For both products, the companies fixed prices, shared customers, allocated markets and exchanged commercially sensitive information,” Kroes said.

The main decisions for setting up both cartels were taken at the Zurich offices of a Swiss company, Treuhand, the Commission said. Treuhand was fined a total of €348,000.

Heat stabilizers are added to PVC products to improve their thermal resistance and overall rigidity. They are used in packaging for food, in credit cards, bottles and coatings.

The European heat stabilizer market was worth about €121 million at the time of the infringements, according to the Commission. (Reuters)